The Life Insurance Corporation of India (LIC) IPO or LIC IPO has created quite a buzz in the markets. The state-owned life insurance behemoth filed the draft papers with the market regulator SEBI in February this year. And now, the much-awaited LIC IPO is expected to be launched soon.
While investors eagerly await the launch of the LIC IPO, let's take a look at why the LIC IPO is important not just for the Indian economy, but also for the government and the stock markets.
#1: For the economy
The Indian government is expected to sell around a 5% stake in LIC to raise funds. These funds generated from the stake sale can be used to boost the growth of the Indian economy. The government can pump this money into infrastructure or schemes. This can help in creation of jobs and even spur consumption. Simply put, this could be beneficial for individuals like you and me.
#2: For the government
The LIC IPO is also extremely important for the government to meet its divestment target and chalk out its future road map. Basically, the government sells stakes in its companies to raise money. This is called divestment.
The government had revised its divestment target for FY22 to ₹78,000 crore from ₹1.7 lakh crore. Obviously, the LIC IPO or stake sale was expected to help the government in achieving this divestment target. However, the LIC IPO was postponed as the Russia-Ukraine conflict fuelled the market volatility. And in the end, the government fell short of its revised FY22 divestment target.
For FY23, the government has fixed the divestment target at ₹65,000 crore. This means that the LIC IPO will once again be crucial for the government to meet this year’s divestment target.
Also, after the listing, the government can further trim its stake in LIC to raise more funds in the future. Simply put, the listing of LIC could help the government to meet its fund requirements, going forward.
#3. For Indian stock markets
Besides the Indian government and the economy, the LIC IPO is also crucial for the domestic stock markets. LIC is a household name and a trusted brand. Hence, people across age groups have been showing interest in the LIC IPO.
Overall, LIC has a customer base of 29 crore policyholders. For these policyholders, 10% of the LIC IPO has been reserved. This could translate into fresh demat account openings. Policyholders, who don’t have a demat account but want to apply under the policyholders’ category, will have to open an account.
The Indian stock markets could thus benefit from new entrants as it is always healthy for any market to have a strong retail investor base.
For date, price and timeline details on the LIC IPO, click here: https://upstox.com/ipo-initial-public-offering/lic-life-insurance-corporation-of-india/42cb1060d6504ae9930f8c595b35a019
For company information, news, updates and application process related to the LIC IPO, click here: https://licipo.upstox.com/
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